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GIC Rates Up Again
April 6, 2022
6:45 am
GR
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1 yr. 2.50%
2 yrs. 3.20%
3 yrs. 3.60%

April 6, 2022
6:50 am
savemoresaveoften
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if any they are insured >$100k...

April 6, 2022
9:27 am
Dean
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.
EQ Bank continues to maintain it's "Top Gun" status. They're only beat out by the GIC Brokers. I'm guessing Oaken will be the next to respond.

Great times for us GIC investors ... and the Best is yet to come ❗

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

April 6, 2022
10:03 am
lifeonanisland
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Getting interesting...but way too early to pull the trigger, with it looking likely that base rate will be raised by one percent by end of June.

April 8, 2022
6:26 am
Jim Sherat
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oh man, what is going on? I had a big GIC in my TFSA mature a couple weeks ago... sitting there at 1.25%, and it's painful, but as others have said 'best is yet to come'. Interest lost waiting a couple or 3 more months, may be a nothing burger, compared to a possible 4%+ for 3 -4 - 5 years coming soon.
Just painful in the meantime. what to do, what to do ...

and I might be a little more excited if not for the Elephant in the Room. Pretty much every grocery related staple we buy is up 20% in recent weeks. some even more. Neilson Trutaste Mil, 4L. Routine $3.99 special, now $5.49 = 38% !!

April 8, 2022
9:31 am
hwyc
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I'm going in with baby steps 🙂

April 8, 2022
10:17 am
savemoresaveoften
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Jim Sherat said
oh man, what is going on? I had a big GIC in my TFSA mature a couple weeks ago... sitting there at 1.25%, and it's painful

Find a place where you can earn at least 2% in a HISA for now ? DUCA, HSBC, Simplii or Tang new customer promo (assume u not targeted by them if u existing custie already)
If you can earn at least 2% without locking it in, its not too shabby, thats what I am doing mostly. At 1.25%, ur opportunity cost while waiting is too high in the mind. You have to do ur B/E analysis to see how much higher rates have to be to make up the daily loss...

April 8, 2022
1:47 pm
Vatox
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savemoresaveoften said

Jim Sherat said
oh man, what is going on? I had a big GIC in my TFSA mature a couple weeks ago... sitting there at 1.25%, and it's painful

Find a place where you can earn at least 2% in a HISA for now ? DUCA, HSBC, Simplii or Tang new customer promo (assume u not targeted by them if u existing custie already)
If you can earn at least 2% without locking it in, its not too shabby, thats what I am doing mostly. At 1.25%, ur opportunity cost while waiting is too high in the mind. You have to do ur B/E analysis to see how much higher rates have to be to make up the daily loss...  

It’s TFSA, so you can’t move it with a click and you may have to possibly deal with the CRA should it not get filed properly. I have the same issue right now. I’m just taking the best available with portions of my money so I can get the higher rate on the next increase. You can’t make stress for yourself just because rates will be higher later, what if something “earth shattering” comes tomorrow and they quickly lower rates again. Just average it to always get a piece of the good stuff.

April 8, 2022
3:53 pm
Bill
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And depending on your personal tax situation 2% outside a TFSA might be better than 1.25% inside one.

I hadn't realized so many GIC buyers are no different than many stock buyers, i.e. trying to time the market instead of just "time in" the market. And, as Vatox says, any blow could happen at any time to throw us back into rate declines to furiously try to stimulate economies again, and then today's rates will be looking pretty good.

April 8, 2022
4:44 pm
Loonie
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I don't think it's the same as with the stock market. However, I think GIC buyers don't always recognize that there is risk even in GICs. It's a different kind of risk, but it's always there - rate risk, currency risk, insurance risk, inflation risk, etc. - but it doesn't affect your principal in the same way as a stock purchase can.

Bottom line, nothing whatsoever is completely 100% "safe". And for this reason, the advocates of "diversification" have some credibility with me.

April 8, 2022
5:16 pm
Norman1
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The stability of GIC principal is not real and actually a bookkeeping illusion.

If I bought a five year 2.75% GIC a few weeks ago, that GIC is not worth principal plus accrued interest today now that five year GIC's can be had for 3.5%+.

Any buyer that buys my pre-owned GIC for principal plus accrued interest will only get 2.75% to maturity. No reason to do so when the buyer can buy a newly-minted GIC for principal plus accrued interest and get 3.5%+ to maturity.

I would have to take at least a 3.3% haircut on the principal to bring the yield to maturity back up to 3.5%!

April 8, 2022
6:00 pm
Bill
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I don't think the current market value of a GIC is relevant as rarely does anyone try to sell their GICs before maturity, they're stuck for the duration. Not like bonds.

And stocks can go down, it's true, but then you also need to note that they can go up, increase your principal, sometimes dramatically. And if you're paying attention and learning as you go along at it that's what happens more often than not, especially in the longer-run term. With GICs you're "guaranteed", i.e. that your principal amount won't go down, or up.

April 8, 2022
9:45 pm
Norman1
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There isn't much difference between a five-year Government of Canada bond and a five-year GIC.

The difference in interest rates and the less frequent crediting of interest of the GIC don't justify the GIC's non-market-value valuation in statements.

April 9, 2022
5:14 am
Bill
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It's the absence of a market for unmatured GICs that justifies it, i.e. virtually no people do/can sell their GICs once they've bought them, thus no-one adjusts up or down how they count their GICs' current "values" for net worth, etc purposes. They carry them at par value throughout their term for any "books" that are kept, unlike readily tradeable, marketable bonds.

April 9, 2022
5:59 am
savemoresaveoften
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Norman1 said
There isn't much difference between a five-year Government of Canada bond and a five-year GIC.

The difference in interest rates and the less frequent crediting of interest of the GIC don't justify the GIC's non-market-value valuation in statements.  

As long as a GIC is non redeemable, it’s valuation does not change and there is no M2M fluctuation.

If a 5y GIC vs a 5y GoC are both at exactly the same yield, I will pick the GoC for sure. Reason being guarantee by govt is better than guarantee by CDIC and essentially no deposit protection limit, plus I have the flexibility to sell the bond if I choose to. That’s why GoC always yield lower than the identical GIC… Same reason why US treasuries are a safe haven no matter what kind of deficit the US runs, at least for now.

April 9, 2022
7:03 am
AltaRed
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It is not quite true that GIC valuations don't change. It is just there is no transparent market for them and thus there is no mark-to-market. Discount brokers, for example, will buy back GICs in order to disburse account funds from an estate...for those GICs for which an issuer may not be willing to 'crystallize' at principal plus accrued interest. They will take a beating in the secondary market, probably at valuations less than a GoC bond. That is a technicality though in 99% of the cases.

My past observations in looking at historical 5 year GIC rates vs GoC5 bonds is a spread of about 50-125 bp in favour of 5 year GICs in the broad (not big bank) market. The spread does not always hold but 100 bp is a reasonable rule of thumb with GIC brokers et al. That appears to be the price of liquidity, or lack thereof.

April 9, 2022
9:27 am
Alexandra
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One nice thing about some GIC's for instance CIBC's bonus rate ones. A two year is at 3% right now and you can opt to be paid out the interest without penalty at maturity, annually, semi-annually or even monthly. Some seniors, especially who want some extra and safe cash flow may like it.

April 9, 2022
1:20 pm
Norman1
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It would be a good idea to include deposit brokers when shopping for GIC's these days. There seems to be lots of rate anomalies between the distribution channels.

Home Trust is issuing 2-year, monthly pay GIC's through its Oaken Financial channel for 2.85%, with $1,000 minimum. But, through discount broker Scotia iTRADE and deposit broker Fiscal Agents, Home Trust 2-year, monthly pay GIC's are for 3.04%, with $5,000 minimum.

Bank of Nova Scotia has a special 3.3% rate on four-year non-redeemable GIC's advertised for its Scotiabank branch channel. But, the rate sheet issued on Friday for its Advisor Deposit Services channel, for brokers and advisors, is offering 3.6% for its four-year GIC's.

April 10, 2022
2:08 pm
Norman1
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AltaRed said
It is not quite true that GIC valuations don't change. It is just there is no transparent market for them and thus there is no mark-to-market. Discount brokers, for example, will buy back GICs in order to disburse account funds from an estate...for those GICs for which an issuer may not be willing to 'crystallize' at principal plus accrued interest. They will take a beating in the secondary market, probably at valuations less than a GoC bond. That is a technicality though in 99% of the cases.

I agree. Lack of a liquid market with bids and asks quoted every second of a trading day doesn't mean that the value is stable.

No-one in their right mind would buy someone else's five-year 2.75% GIC, a few weeks old, now for principal + accrued interest when the person can go the same issuer and be issued a fresh five-year GIC's that pays 3.5%+. That's all one needs to know to understand that principal + accrued interest valuation is a fiction.

Someone will definitely take a beating for unloading a GIC before maturity through a broker. Naïve people use to take a beating selling their bonds too!

That's because there's no exchange for bonds, like there is for stocks, where buyers competitively bid on the bonds. Instead, bond buyer is just the broker's bond desk buying for its own inventory.

April 11, 2022
8:28 am
frugal lady
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Rates up Apr 11

1 Year 2.60%
2 Year 3.30%
3 Year 3.65%
4 Year 3.65%
5 Year 3.70%

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